PT-2021-000393 - [2025] EWHC 2749 (Ch)

The standard of advocacy at this hearing was high on both sides. Both Mr Wheeler KC and Mr Cowen KC presented their respective clients’ cases clearly and succinctly. There was one exception to this, however, which was in the rather broad use of the term “offer”, which at times seemed to refer to the distinct concepts of tender, offer of payment, contractual offer and invitation to treat. In the interests of making this judgment as clear as I can, I address what I understand those terms to mean at the outset.

Starting with tender, both parties referred me to elements of Shearer v Spring Capital [2013] EWHC 3148 (Ch), a decision of Daniel Alexander QC sitting as a Deputy High Court Judge, for the general position. The rules are helpfully summarised at paragraphs [123]-[ 170] and [217]-[220] of his judgment. Mr Alexander QC started with what he described as “the fundamental idea” that “if you have a mortgage but you have and keep aside the money to pay all of it off and tender that sum (plus costs) to the mortgagee unconditionally but he refuses to take it, you should be able to go to court to force him to give your deeds (or other security) back in exchange for payment and have interest stop running from the time of tender.”

For a tender to be valid the sum must not simply be offered, it must be set aside in some way so that it is treated as the mortgagee’s money to be had on demand (Shearer at [124] and [139]-[154]; Çukurova Finance International Ltd v Alfa Telecom Turkey Ltd (No 4) [2013] UKPC 2 at paragraph [132]).

The effect of a tender, if valid, is to give the court the power to curtail a right to interest (Shearer at [126]). Refusal of a valid tender is not normally a breach of contract (Shearer at [125], although some doubt was cast on this by Çukurova at [42]). Even in the absence of breach it is open to the party making a valid tender to bring an action for redemption to resolve the matter, essentially seeking a court order to compel the creditor to accept the tender.

Mr Cowen referred me to Mr Alexander QC’s observation at paragraph [154] of Shearer: “The upshot is that the cases have not really addressed the situation where a tender is made on the basis that a new lender is and remains willing to provide the funds to pay off the loan provided that it is substituted in the existing security immediately.” This links to the requirement that the tender must be unconditional (Shearer at paragraph [170]). However, where payment is to be by a new loan it does not invalidate the tender to make it conditional on the original lender releasing its security in favour of the new lender, since that simply states what the law requires in any event (Shearer at paragraphs [217]-[220], referring to Graham v Seal [1919] Ch 31 at 35).

Mr Cowen submitted that the communications relied on in the Defence to Counterclaim were tenders as that term was properly understood. I will address that in the context of those communications. His primary position, however, was that the Claimants did not need to meet the formal requirements of a tender in circumstances where they had offered to repay sums due under the Loan. The cases certainly refer to an offer of payment in terms that suggest that it is distinct from a tender, most notably in Çukurova at paragraph [42]. The key is pinning down what such an offer involves.

On the Claimants’ case an offer of payment must differ from a tender because the two positions are advanced as alternatives. It is equally not a contractual offer, however. I say that for two reasons. First, a valid offer of payment gives rise, on Mr Cowen’s case, to an obligation on the creditor to accept it and a contractual offer can be accepted or declined by the offeree. Secondly, the two seem to me different in nature. The former is purely the exercise of a pre-existing right, the discharge of a pre-existing obligation or both; the latter is an attempt to vary the parties’ existing rights and obligations or to create new ones. If an offer of payment is made conditional upon the offeror receiving something to which it would not otherwise be entitled, that seems to me to be an attempt to vary the rights and obligations under the contract and not simply to perform them; it could be a contractual offer but not an offer of payment.

The requirements of a contractual offer are well understood and there was no dispute as to the principles, which are summarised in Chitty at paragraphs [4-003]-[4-007]. The key point is at [4-003]: “An offer is an expression of willingness to contract on specified terms made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed.” The test of agreement is objective, such that an appearance of intention will typically suffice. None of the exceptions to the objective test apply here. Mr Wheeler submitted that where an offer comprises multiple elements the normal understanding would be that it cannot be accepted in part. He referred to paragraph 4-038 of Chitty: “partial acceptance” is not acceptance but may be a counter-offer. I accept all that in principle, although whether it applies in practice depends on the language used, to which I will turn shortly.

Finally, there is an invitation to treat. Again, the principles around that concept are well understood and are summarised in Chitty, this time at [4-011]-[4-014]. The general rule is set out at [4-011]: “It is distinguishable from an offer primarily because it is not made with the intention that it is to become binding as soon as the person to whom it is addressed simply communicates their assent to its terms.” The issue is not simply the language used. The communication may lack sufficient detail (Chitty, paragraph 4-012, referring to Gibson v Manchester City Council [1979] 1 WLR 214, where the lack of special conditions that would ultimately be part of any conveyance was fatal to a finding of offer). It is also important to consider whether it is reasonable for the other party to expect further negotiations (Chitty, paragraph 4-013).

It is important to be clear on why invitations to treat are relevant to this case. I am not suggesting that there is some sort of hierarchy, and that a communication needs to ascend through the levels until it reaches the point where it is an offer of payment (or, better still for the Claimants, a tender). Contractual offers and invitations to treat, on the one hand, are different in nature from offers of payment and tenders on the other. Both contractual offers and invitations to treat are therefore equally useless to the Claimants. There may be a temptation, however, to start by assessing whether the communication fits within the well understood concept of a contractual offer and, if it does not, conclude that the payment related elements must be an offer of payment. That temptation must be resisted; the logic that underlies it is false. In many cases I do not consider that these communications amounted to a contractual offer, but nor do I consider that they contained an offer of payment. They were part of the back and forth that is typical in inter-solicitor communications seeking to settle a dispute. They were, at most, invitations to treat.